Plans by the European Commission to create new European Union funding for the green industry are facing mounting opposition. Seven EU countries openly rejected the idea in a letter addressed to the European Commission vice president responsible for trade, Valdis Dombrovskis. The document was signed by the Czech Republic, Denmark, Finland, Austria, Ireland, Estonia and Slovakia.
Germany, the Netherlands and Belgium, while not signatories to the letter, also oppose any new joint EU borrowing, further expanding the list of countries likely to vote against such plans when EU leaders meet to discuss them on February 9-10.
All 10 countries say the EU should be using funds already approved instead of seeking more money.
The European Commission, responsible for fair competition in the 27-nation EU, believes new funds are needed to even out the abilities of poorer and richer countries to help their green industries against competition from China and the United States.
EU officials are especially worried that the U.S. Inflation Reduction Act, which offers USD 369 billion in subsidies to firms producing electric vehicles, batteries, wind turbines or hydrogen in the U.S., will lure away EU firms.
The fight to keep Europe attractive for the green industry is made even more difficult by energy prices, which are much higher in the EU than in the U.S., and by the often long EU permitting processes for green investment.
European Commission President Ursula von der Leyen said last week the EU would prepare a law to make life easier for its green industry and back it up with state aid and a European Sovereignty Fund, as well as a more immediate funding “bridging solution”, to keep businesses from moving to the United States.
Opposition to new fund
In the letter opposing the special fund, the seven countries said the EU should first spend the money it had already agreed to raise through the EUR 800 billion post-pandemic recovery and resilience fund (RRF) of grants and cheap loans.
“We have to ensure that the economy can better absorb the already agreed EU funding. So far, only around EUR 100 billion of the total of EUR 390 billion of the RRF grants have been used,” the seven countries wrote.
They added that there is still an unused loan capacity available in the RRF.
Germany, the Netherlands and Belgium share that view, pointing to unused loans from the recovery fund that governments have not claimed because they preferred grants.
The letter said that instead of looking for new money, the EU should cut red tape for investments and make progress on its Capital Markets Union, a project that has been dragging on since 2014 and which is expected to boost the use of private capital across the EU.
(Reuters, January 27, 2023)
